African technology start-ups are increasingly building their products on Chinese AI models, and American investors’ retreat from the continent is making that shift easier, according to Lexi Novitske, general partner at pan-African venture capital firm Norrsken22.
“If you take a look at what technology companies locally are building their systems on today, it’s open source, it’s Chinese-based AI models because they’re cheaper and they’re more available,” Novitske said in an interview for the TechCentral Show. She pointed to Alibaba Cloud’s AI tools, which she said were lower cost, and its Qwen models, which she said had done very well in the market.
Novitske, who has lived and invested in Nigeria since 2012 and was an early backer of Paystack and Flutterwave, said the US was leaving “a huge vacuum” in African tech. But she framed it as a failure of private capital rather than of government. “I think US private capital especially is missing out. I don’t think it’s as much of a government policy story as it’s a private capital one,” she said.
The cost, she argued, goes beyond missing out on the spending power of a young, digital-first consumer base. US companies that stay away also risk losing access to a new source of data as AI products are built around African users.
Novitske said the pullback was not unique to Africa. Venture capital globally is being “reallocated to a few very large venture firms in the US and doubling down on the AI space within Silicon Valley specifically”, she said, and large international investors have retrenched to their home markets as a result.
She expects that to reverse in “maybe one or two years” as companies go looking for growth in under-penetrated markets. In the meantime, she said, US investors were “acting a little bit short-sighted” by ignoring a young population whose digital habits, formed now, will stay with them for life.
The fintech playbook
Chinese companies have already shown how that plays out, Novitske said. Their first wave in Nigeria was hardware, with handset maker Transsion and Huawei rolling out phones and telecoms infrastructure. The second was fintech.
OPay built a daily habit with Nigerian users through ride-hailing and logistics before converting them to financial services, she said. It is now one of the country’s largest agent banking platforms, offering savings, microloans and wealth management. PalmPay, whose seed rounds she said were led by Chinese investors, built payments infrastructure across Nigeria and has become one of the market’s biggest incumbents.
“A lot of these Chinese players are extremely well funded. They can afford to take a loss-leading position for three, four years until they really build out the network effects,” Novitske said – a luxury most local founders, generally short of cash, don’t have.
Read: Cape Town fintech Stitch unlocks R1-billion funding round
She credited them with building an adoption curve that also benefited local players such as Moniepoint and Flutterwave. But they have “swept up so much of the market that it’s actually a little bit, I would say, uncomfortable for Nigerian regulators to see these big fintech companies that now are driving a lot of transaction volume who are actually owned and run by Chinese players”.
Regulation, rather than Nigeria’s notorious power cuts, is the biggest challenge facing start-ups in the country, she said. Regulators are trying to act in the public interest, “but a lot of times their decisions are pretty rash. They’re not communicated or engaged with the private sector.”
Norrsken22 closed its debut fund at US$205-million in 2023. It was founded with the Norrsken Foundation of Klarna co-founder Niklas Adalberth and is backed by founders of companies including Skype, Delivery Hero, King and Minecraft maker Mojang. It invests in asset-light tech companies, typically from series A to series C, and its South African portfolio includes digital bank TymeBank, now GoTyme Bank, and payments company Stitch.
Novitske said the fund is about halfway through deploying its capital and has had no exits yet – its investments are on average about two years old. It will start thinking about a second fund towards the end of this year, probably with a similar strategy.
“Right now we’re seeing probably the best opportunities in Egypt and South Africa,” she said, though she expects Nigeria to become more attractive over the next couple of years as monetary policy reforms and infrastructure investment feed through to consumers.
Beyond fintech
Norrsken22 is looking at media and content, quick commerce and social commerce, and, within AI, at local-language and voice applications.
Optasia’s oversubscribed JSE listing last November will encourage more tech companies to consider Johannesburg, she said. But most of the continent’s big names are still heading offshore in search of liquidity: OPay is looking at the US, Airtel Money at London and PalmPay at Hong Kong, where it is preparing for a potential IPO, Bloomberg reported in August. For local exchanges to compete, Novitske said, local asset managers need mandates to invest in the asset class earlier so they can learn to understand it. — © 2026 NewsCentral Media
- The full TechCentral Show interview with Lexi Novitske will be published next week.
